Gifts and loans from the Bank of Mum & Dad (BOMAD) to first-time home buyers will reach almost £30 billion over the next three years, according to the latest analysis from property firm Savills. In 2023, £9.4 billion was gifted to 164,000 first-time buyers, accounting for a huge 57% of all mortgaged first-time buyers. This amount has almost doubled since 2019, as a result of a more stringent mortgage market, and higher mortgage rates.
While the number of assisted buyers is down from a peak of 198,000 in 2021, this is the highest proportion of first-time buyers receiving help since 2012, and is 10% up on 2022.
“While many homebuyers enjoyed record low interest rates during the early part of the decade, more stringent mortgage requirements, which have been in place since the start of the pandemic, have impacted higher LTV lending, most commonly used by first-time buyers,” Frances McDonald, director of residential research at Savills said.
“In addition to this, record rental growth and increased mortgage rates (particularly for high LTV products) have acted as a further blow to first-time buyers’ home-owning aspirations. As a result, a greater proportion have needed support to get onto the housing ladder, and those who were able to, took advantage of family support to try and secure a deal at a lower mortgage rate.”
Lower mortgage rates should mean a smaller proportion of first-time buyers are likely to need support from the Bank of Mum and Dad. However, over half (54%) of mortgaged buyers are expected to use financial gifts this year, falling to 51% in 2025, and 50% in 2026.
“Despite the Bank of England’s recent decision to cut the base rate, we expect that lenders will continue to favour less risky, lower LTV mortgage lending. This means that buyers will still have a hard time getting their first foot on the housing ladder,” added Frances McDonald.
“Those who have the option of family support and are secure in their employment will find it much easier to get onto the housing ladder and only the highest earners and those who have received significant support are likely to be able to buy at the top end of the market.”
